European regulators are moving to clarify reporting requirements for firms complying with new derivatives clearing rules, as the active account requirement (AAR) under the European Market Infrastructure Regulation (EMIR) 3 continues to present challenges for market participants. The European Securities and Markets Authority (ESMA) plans to publish a supervisory briefing, accompanied by a Q&A, to address questions surrounding the annual reporting obligations stemming from the AAR.
The AAR, which came into force last June, aims to enhance the resilience of the EU clearing landscape by requiring EU market participants to maintain active accounts at EU central counterparties (CCPs) for certain derivatives. This is intended to reduce their exposure to important third-country CCPs, often referred to as Tier 2 CCPs. However, implementation has proven complex, prompting the need for further guidance.
ESMA published its final report on the Regulatory Technical Standards (RTS) specifying the conditions under which the AAR should be met on June 19, 2025, following a public consultation that garnered feedback from CCPs, clearing members, and other stakeholders. The final report streamlined operational conditions and stress-testing procedures based on that feedback. Notably, the final RTS also included a simplification of reporting requirements related to risks and activities, the representativeness obligation, and the fulfillment of operational conditions.
The upcoming briefing and Q&A are a direct response to the difficulties firms have encountered navigating these rules. According to sources, the focus will be on clarifying how firms should report data to comply with the annual reporting obligation. The precise nature of the challenges firms are facing isn’t detailed in the available information, but the need for clarification suggests complexities in interpreting and applying the RTS.
The AAR is a key component of EMIR 3, a broader set of reforms designed to strengthen the stability of the European financial system. By encouraging clearing within the EU, regulators hope to reduce systemic risk and increase oversight of derivatives trading. The move comes amid ongoing scrutiny of the concentration of clearing activity in a limited number of CCPs, particularly those located outside the EU.
The RTS will now be submitted to the European Commission (EC) for endorsement, after which they will be subject to scrutiny by the European Parliament and the Council. This process indicates a continued commitment from European authorities to refine and implement the EMIR 3 framework.
The publication of the supervisory briefing represents a proactive step by ESMA to ensure consistent application of the AAR. Clear guidance on reporting requirements is crucial for firms to accurately fulfill their obligations and avoid potential penalties. The move also underscores the importance of ongoing dialogue between regulators and market participants in the wake of significant regulatory changes.
While the details of the briefing remain forthcoming, the initiative signals a recognition that the initial implementation of the AAR presented practical challenges. The Q&A format suggests that ESMA is prepared to address specific concerns raised by firms and provide tailored guidance to facilitate compliance. The timing of the briefing, less than a year after the AAR came into effect, highlights the dynamic nature of regulatory implementation and the need for ongoing adaptation.
The focus on onshore clearing of interest rate derivatives specifically points to a desire to bolster the EU’s financial infrastructure and reduce reliance on external clearing houses. This aligns with broader geopolitical trends and a growing emphasis on financial sovereignty within the EU. The AAR, is not merely a technical adjustment to regulatory standards, but a strategic move with wider implications for the future of derivatives trading in Europe.
